Mid Europa nets $275m on Karneval sale

Mid Europa Partners, a private equity firm focused on Central and Eastern Europe, has sold its 83% stake in Karneval, a Czech cable business, to Liberty Global of the US for €322.5m, generating a money multiple of just over five times.

Mid Europa Partners, a Central and Eastern Europe buyout firm, has sold Karneval Media, a Czech Republic-based cable business, to UPC Europe, a subsidiary of US cable operator Liberty Global, for €322.5 million ($415 million).
According to Liberty Global, the purchase price represents a 9.8 times multiple on its estimate of Karneval’s operating cash flow for 2007.

Butcher: expanding team to 15 or 16 by end of year

Baring Communications Equity Emerging Europe, a $74.25 million vintage 1997 fund, also exited its investment in Karneval in the deal.
The sale of Karneval will provide Mid Europa Partners with profit of $275 million.

Mid Europa Partners invested in Karneval through AIG Emerging Europe Infrastructure Fund, a €458 million fund raised when the team was EMP Europe, the European arm of EMP Global. The group became independent in 2005.

The fund made an undisclosed investment in Karneval in 2003 to acquire a 31.7 stake in the business, with a follow-on investment in 2005 increasing its stake to 82.4 percent.
Craig Butcher, a partner at Mid Europa Partners, said that the blended return after the follow-on investment is slightly more than 5 times the original investment. AIG Emerging Europe Infrastructure Fund, said Butcher, invested in 11 businesses and has completed seven exits so far. In addition to the $275 million from the Karneval sale, Mid Europa Partners announced that it had returned $640 million to investors in the fund by March 2005.
Credit Suisse was the exclusive financial advisor in the Karneval auction. Butcher said that the sale had attracted interest predominantly from financial investors, including funds focused on the region and large Western European buyout firms. White & Case provided legal advice to Mid Europa Partners.
Formed from the merger of TES Media and Intercable in 2003, Karneval offers cable television and broadband internet services to residential customers in the Czech Republic. The business, which will also launch telephony services later this year, has more than 253,000 cable televsion subscribers and 57,000 broadband internet subscribers.
Butcher said that Mid Europa Partners’ current fund, Emerging Europe Convergence Fund II, which closed on €650 million in January of this year, has made three investments: Wheelabrator, a US-based surface preparation and finishing equipment specialist; Heidelberger Calcium Aluminatres, a cement business based in Croatia; and Aster, a Polish media and communications company.
Mid Europa Partners has a team of 13 investment professionals operating from offices in London, Budapest and Warsaw. Butcher said that the firm intends to expand to 15 or 16 investment professionals by the end of the year.